Kraft Sues Cracker Barrel Over Expansion Plans

So, how many of you just figured that there was some connection between the Cracker Barrel cheeses in the dairy section of the
supermarket and the Cracker Barrel country stores on the side of America’s highways and byways? There isn’t, and Kraft Foods, which launched the Cracker Barrel brand natural cheese in 1954 is suing the national roadside chain, which was founded in 1969, over its plans to
extend its brand into retail products that might further confuse consumers into making just such an assumption.

Lebanon, Tenn.-based Cracker Barrel signed a licensing agreement with
John Morrell Food Group, a subsidiary of Smithfield Foods, in November to sell branded food products such as “ham, bacon, assorted lunch meats, glazes, jerky and summer sausage” through
grocery, club stores and mass merchandisers, according to a release issued at the time.

But
it also has its eyes on shelves in other areas of the supermarket, if applications filed with the U.S. Patent and Trademark Office and cited byTheTennessean’s Duane Marsteller are any
indication, including oatmeal, muffin mix and lemonade and fruit tea.

The plans “threaten to destroy the substantial goodwill that Kraft has created in its Cracker Barrel
trademark, and to create significant confusion and cannot be permitted,” according to the lawsuit filed in U.S. District Court, Northern District of Illinois, last week.

“Kraft says it never took formal legal action until now because the chain had sold only a very limited number of mixes, candies and sauces through its shops and website,” the AP
reports. But it claims the new developments “could harm the reputation of its
‘award-winning’ Cracker Barrel cheese, which has generated sales of more than $100 million a year since 2000,” Candice Choi writes. “In the lawsuit, Kraft notes the hundreds of
awards its cheese has won through the decades, including ‘17 gold medals in the New York State Fair from 1959 to 1987.’”

“We have received a copy of a
complaint that Kraft Foods filed in federal court,” Cracker Barrel spokeswoman Jeanne Ludington told the Nashville Business Journal in an email late Friday. “We are
reviewing and evaluating the materials and may comment in the future as necessary.”

“The case involves two large corporations of unequal size,” Marsteller
observes. Kraft is a multinational conglomerate with dozens of brands generating $19 billion in annual revenue while Cracker Barrel operates 621 restaurants within the U.S. with $2.58 billion in
revenue last year.

“Cracker Barrel’s situation is unique in that two well-recognized yet unrelated brands have existed without conflict for so long,” writesFood World News. “It does not help that John Morrell Foods is
related to Kraft rival Smithfield Foods,” it points out.

Kraft did leave the door open to a negotiated settlement.

“Kraft hopes that this matter can be resolved without having to proceed with the litigation and has
invited Cracker Barrel to propose a settlement,” spokeswoman Sydney Lindner tells TheTennessean. “If settlement talks do not go forward, the litigation will.”

The roadside company has been on a roll lately, according toForbes’ John Dobosz, who observed a couple of weeks ago that its “stock is really cooking, and it’s serving up more than tasty vittles.” Shares have quintupled in four
years and revenue, profits and dividends have all been in the upswing.

“Another reason to like Cracker Barrel is the presence of an activist investor helping to keep pressure
on the company to improve performance: Sardar Biglari, the 35-year old Iranian-American manager of the Lion Fund and
CEO of publicly traded Biglari Holdings,” Dobosz wrote.

If you’re packing the van for a family vacation, by the way, the Cracker Barrels that sell everything from
rocking chairs to metal-wrench wind chimes -– with a few gimcracks and corn muffin mixes in between -- has a handy webpage
that’s “happy to help you plan a road trip with store hours and directions to any Cracker Barrel in the United States.”

But don’t expect to be served a slice
of Cracker Barrel Vermont Sharp White cheddar cheese on a Nabisco Fire Roasted Tomato & Olive Oil Triscuit cracker. Then again, as The Tennessean’s Marsteller suggests, “One
potential settlement scenario could involve Kraft licensing or selling the cheese brand to Cracker Barrel.” But you’ll probably have to bring your own Triscuits.
Nabisco is now part of the former Kraft Foods’ global snacking and food brands now known as Mondelez International.

Maybe not a slam dunk for Kraft as long as Cracker Barrel stays out of the dairy case. Amazing that both brands go back so far without any previous litigation. I hope both companies can find a way around the problem. Cracker Barrel (the restaurant) was a guilty pleasure when I lived in TN. Cracker Barrel (the cheese) is my go-to sharp cheddar for cooking/baking.

Does Kraft really think people are so stupid that they can't tell the difference between Cracker Barrel cheese products and whatever Cracker Barrel the restuarant is selling? Oh I guess they're right. The customer doesn't seem to know much of anything.

Thom Forbes has written about marketing and media for more than 25 years. He was editorial director of Adweek and its sister publications in the 1980s and has covered the beat as a freelancer since 1990. For more than three years, he wrote Around the Net in Brand Marketing for MediaPost.